TMI Blog2019 (7) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... garded as a member if he has acquired the right of membership although his name is not in the register. One may become a shareholder in a company by subscribing to memorandum as provided by section 41 of the 1956 Act by allotment apart from other modes - every company making an allotment of shares is obliged to deliver to an allottee a certificate of shares within three months after the allotment. In the case of a transfer, the certificate has to be delivered within two months unless extended by the Tribunal. Transfer of share - compliance with section 108 of the Act 1956 - HELD THAT:- There are numerous conditions laid down which are required to be fulfilled before a company can lawfully register a transfer. We have failed to understand why the agreements between the parties have not been produced on record and why Ms. Renu Data has also not been made a party. In the facts and circumstances of the case Ms. Renu Data has been a necessary party as her presence before the court was most important. However, we are of the considered view that the version adopted by the petitioner is far from satisfactory and does not inspire confidence by keeping in view the rudimentary principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board of respondent No. 1. (h) Any other relief which this hon'ble Board deems fit in the facts and circumstances of the case. 2. Apart from the aforesaid prayers the petitioner had also prayed for interim orders. A perusal of the order file shows that initially talks for settlement continued and then application challenging maintainability of the petition was filed. Directions were also issued by the erstwhile Company Law Board to complete pleadings as is revealed by order dated April 24, 2017. The matter remains part heard and the arguments could not be concluded. Eventually the matter was transferred to National Company Law Tribunal on July 25, 2016 and it was placed before the Second Bench comprising of Ms. Ina Malhotra, the hon'ble Member (Judicial) and Mr. R. Varadharajan, the hon'ble Member (Judicial). The parties could not conclude their arguments. As per record there is no interim direction ever issued. 2.1 The case of the petitioner is as follows (A) the petitioner is a share- holder in respondent No. 1-company along with Mr. Alok Sharma- respondent No. 2 and Ms. Shashibala. The authorized share capital of the company is ₹ 50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid-up shareholding amounting to 3,92,157 shares. To agitate the aforesaid acts of oppression the petitioner-company duly authorized one Mr. Manprit Singh Chadha to file the instant petition on the strength of its board resolution dated July 7, 2010 (annexure P3). 2.3 The petitioner has also given detailed particulars of the respondents asserting that respondent No. 2 is a director of respondent No. 1-company and holds 51,00,000 equity shares (including partly paid shares), amounting to 26 per cent. of the issued and subscribed share capital. Likewise, respondent No. 3, Mrs. Shashi Bala is also another director of respondent No. 1-company and she holds 45,07,843 equity shares (including partly paid shares) amounting to 23 per cent. of the issued and subscribed capital. 2.4 Respondents Nos. 2 and 3 were the promoters of respondent No. 1- company which was duly incorporated on September 25, 2007 (annexure P1). On June 6, 2010 it was granted a no objection certificate to operate Non-Scheduled Air Transport Service in India. On realization that growth and future of the company could be secured by operating a Scheduled Passenger Airline, its directors started making ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely upon grant of the NOC, Shri Ajay Singh would be appointed as a director and would act as chairman of the board, with a casting vote and at the same time respondent No. 3 would forthwith resign upon grant of such NOC. 2.6 The claim of the petitioner is that in pursuance of agreement as set out above the respondent-company applied for grant of NOC for operating a Scheduled Passenger Airline. The parties also took steps in terms of the agreement which are as follows : (i) The authorized capital of the company was increased by the respondents from ₹ 7 crores to ₹ 50 crores ; (ii) The petitioner infused a sum of ₹ 43,22,10,784 into the desi gnated account of the company ; (iii) The petitioner was issued 9,67,784 equity shares of face value of ₹ 10 at par partly paid-up in the sum of ₹ 0.10 per share, and transferred 3,92,157 shares fully paid-up, with the balance 7,63,27,434 equity shares to be issued upon receipt of the NOC, for the issue of which the remaining amount of ₹ 43,12,50,000 was treated as share application money. 2.7 It is claimed that the aforesaid steps have been confirmed by the board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and claiming that it contained false statement (annexure P8) the petitioner has asserted as under : (i) The agreement inter se the petitioner and the respondents was only valid and subject to an NOC being issued to the respondent- company within six months ; (ii) As six months had allegedly expired and no NOC issued, it has resulted into unpaid calls on the aforementioned 96,07,843 partly paid-up equity shares issued to the subscriber and all such shares stand forfeited ; (iii) An escrow agreement had been entered into between the petitioner and the respondents wherein one Ms. Renu Data was designated as the escrow agent and as such was holding some pro perty in escrow which was to be returned to the respondent in the event of the NOC not being issued within six months. 2.10 The petitioner has then claimed in categorical terms that there was no share subscription agreement (for brevity SSA ) nor there was any escrow agreement executed between the petitioner and respondents. It has also been controverted that there was any escrow agent appointed with the name of Ms. Renu Data. It is further denied that there was any stipulation of six month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppressive as the petitioner is deprived of its share and has also been denied their rights and legitimate expectations of owning 90 per cent. of the shareholding of the company. The petitioner has always been ready and willing to pay the balance amount of dues towards the shares, as and when called upon to do so. It is alleged that the aforesaid approach has been adopted by the respondents with the sole intent to oust the petitioner from respondent No. 1-company which is guided by greed. Respondents Nos. 2 and 3 are using the company as a vehicle of their personal enrich ment and they are using their position to the detriment of respondent No. 1-company beside breaching their fiduciary duties and committing fraud. 3. On the basis of the aforesaid allegations the petitioner approached the erstwhile Company Law Board and the matter has now been transferred to the National Company Law Tribunal. The petitioner has made various prayers which have been set out in the opening paragraph of this order. 3.1 In response to notice having been issued, the respondents have filed their reply and have primarily raised various preliminary objections/submissions which are sum up as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xperience of more than 16 years and a well known figure in the Aviation Industry. He is accomplished Aviation Professional and Former President and CEO of Air Sahara. He has longer experience than Mr. Ajay Singh belonging to petitioner No. 1 and was also holding a planner in Air Sahara. After discussion between respondent No. 1-Mr. Alok Singh and Mr. Ajay Singh the petitioner expressed its willingness to join as strategic investor in respondent No. 1-company for Scheduled Passenger Airline Business and the NOC was to be obtained by respondent No. 1-company keeping in view the extensive experience of respondent No. 2 in Aviation Industry. It has been clarified that the petitioner did not have any interest in Non-Scheduled Air Transport Service or other business run by respondent No. 1-company. 3.7 Consequently a SSA was signed between the parties on December 6, 2010 which has not been deliberately placed on record. The aforesaid agreement is in possession of the petitioner and has been suppressed although the petitioner himself has mentioned about the said agreement. The basic terms and conditions of the SSA and escrow agreement dated December 6, 2010 have been listed, inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, an escrow agreement has been executed between the parties wherein Ms. Renu Data R/o. 1A-801, Bharat Apartment, Plot No. 8, Sector 18, Dwarka, New Delhi-75 was appointed as an escrow agent and it was agreed that all the documents in relation to the agreement referred as escrow property will be kept by the escrow agent. Copy of the final draft of the share subscription agreement and escrow agreement dated December 6, 2010 are annexed and marked as annexure 'a' (Colly). 3.8 In the reply respondents have repeatedly asserted that both the agreements dated December 6, 2010 namely SSA and escrow agreement are in power and possession of the petitioner and respondents do not have even xerox copy of the same. However, a reference has been invited to various e-mails exchanged between the parties prior to and post execution of the agreement. A perusal of the same would establish beyond a rea sonable doubt that the agreements were executed by the petitioner. The e- mails have been placed on record and are marked as annexure B (pages 111 to 125). The petitioner also has issued a notice under Order 11, rule 16 of the Code of Civil Procedure, 1908 read with section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be con sidered as a breach of the SSA. According to the stipulation it would auto matically result into and stand as unpaid as on 96,07,843 partly paid-up equity shares issued to the petitioner and all such shares were to stand for feited without any recourse to the subscriber. On account of suppression of documents at the instance of the petitioner the confusion has been created and if it produces the original share certificate then it would establish the aforesaid terms of the understanding. 3.10 On June 23, 2011 respondent No. 1-company addressed a letter to escrow agent, Ms. Renu Data with a copy to the petitioner for implemen tation of the terms and conditions of the agreements, which was success fully delivered to both. Again a letter dated August 11, 2011 was written to escrow agent informing her that in terms of SSA/escrow agreement on the lapse of the stipulated fifteen days the partly paid-up shares issued to the petitioner would stand forfeited and necessary compliance in relation to the same was made. All the aforesaid facts are completely known to the escrow agent as well as the petitioner. There was no response given and the said position was accepted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the peti tioner duly transferred and purchased by it in respondent No. 1-company and the same could have never been lodged with the company as the nec essary terms and conditions of the agreement were never fulfilled. The aforesaid facts have been admitted by the petitioner also. There is no trans fer stamp affixed on the said transfer form which suffers from various other infirmities as well. The petitioner cannot claim any title in respect of the above shares and the same have been misused by the petitioner in con nivance with the escrow agent who is nominee of the petitioner group. In good faith and trust she was entrusted with the duty to act as such. Ms. Renu Data is in fact a wife of an employee working for Mr. Ajay Singh and shared an employer-employee relationship and accordingly Mr. Ajay Singh has been able to exert undue pressure and influence on the escrow agent who is acting under his instructions. The respondents have asserted that the escrow agent was paid escrow fee of ₹ 5 lakhs (less TDS) by respond ent No. 1-company in terms of the escrow agreement. The escrow agent is supposed to be in possession of all original documents. 3.12 The respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said des ignated account without even the project of scheduled airline being started and only a small sum of ₹ 10,654 was left in the said designated account. It clearly shows that the petitioner did not have any intention to invest in the scheduled business of the company and their entire case falls to the ground on that score alone. A copy of the bank statement of Syndicate Bank Account No. 90361010013334, Barakhamba Branch, New Delhi has been placed on record (annexure H). The amount brought in by the peti tioner was just ₹ 9,60,784 towards partly paid-up shares and the same was to be forfeited as per clause 6.3 of the SSA in case the NOC was not received within a period of six months. 3.15 The respondents have also filed paragraph-wise reply by reiterating the stand already taken in the preliminary objections/submissions. Addi tionally, the stand of the respondents is that petitioner suppressed the fact of increase of authorized capital. The authorized capital was increased by respondent No. 1-company from ₹ 50 crores to over 105 crores in an extraordinary meeting held on December 6, 2010. A copy of Form 5 has been placed on record. The factum of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix months allegedly stipulated in the SSA and escrow agreement. 4. The petitioner has filed rejoinder and has reiterated the averments made in the petition. It has been vehemently denied that there exists any SSA or escrow agreement between the parties and the respondents have failed to demonstrate the existence of the same. The respondents have not acted on any document like SSA or escrow agreement in any of the purported board meeting. The petition is maintainable as the petitioner has legitimate expectations to capture 90 per cent. shareholding in respondent No. 1- company. The respondents transferred 3,92,157 fully paid-up shares and issued partly paid-up shares amounting to 9,67,784 at 0.01 per share. It entitled the petitioner to a total holding of 51 per cent. shares of respondent No. 1-company. All other averments have been reiterated and it is asserted that on the receipt of NOC the petitioner was to receive 90 per cent. shares of respondent No. 1-company as per article 1.8 of the agreement. The petitioner has complied with all the duties and obligations as per the agreement and had in a timely manner infused a sum of ₹ 43,22,10,784 towards share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edent of the company shares are kept in its safe custody. Thus, every company making an allotment of shares is obliged to deliver to an allottee a certificate of shares within three months after the allotment. In the case of a transfer, the certificate has to be delivered within two months unless extended by the Tribunal. 7. In so far as transfer of share is concerned the provisions of section 108 of the Act 1956 have to be complied with. There are numerous conditions laid down which are required to be fulfilled before a company can lawfully register a transfer. 8. In the present case the petitioner has placed reliance on some oral understanding and the VIII point concerning the aforesaid agreement have been detailed in paragraphs 3.1 and 3.2 of the petition. In paragraph 3.5 clauses of the alleged agreement as asserted by the petitioner have been set out verbatim. We proceed to test and examine the case of the petitioner in the light of those clauses. According to clause (iii) the petitioner was to infuse a sum of ₹ 43,22,10,784 into the account of one Mr. Ajay Singh who is a director in the petitioner-company towards share application and share application ..... X X X X Extracts X X X X X X X X Extracts X X X X
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